By Jeff Bennett
General Motors Co. intends to boost its capital expenditures by
20% this year as it looks to grow its luxury brand, improve its
overall vehicle portfolio and respond to regulatory demands.
The auto maker on Wednesday outlined a plan at an automotive
conference to spend as much as $9 billion over the next 12
months--the highest amount the company has spent since emerging
from bankruptcy in 2009. GM Chief Financial Officer Chuck Stevens
said the company intends to plow the money into the development of
more Cadillac models while improving the current offerings such as
the Chevrolet Malibu.
The 2015 investment strategy underscores a stark turning point
for the auto maker as it now looks to go on the offensive and grow,
bolstered by a surety the North America profit margins will
continue to rise and its European operations will return to
profitability next year. Declining recall costs will also help its
financial picture. The company spent $3 billion on recall costs
through the third quarter. It hasn't yet provided a full-year
figure.
"I think we are demonstrating a new resiliency within the
company across the board," GM Chief Executive Mary Barra said
Wednesday during an automotive analyst conference in Detroit. "We
have to invest in the brands but remain disciplined."
For example, the company intends to plow $12 billion over the
next five years into the Cadillac brand alone to add eight models
to the portfolio while accelerating its sales in China. The company
still anticipate global Cadillac sales to exceed 500,000 vehicles
annually by 2020. Meanwhile, GM is also working on bringing an
all-electric powered vehicle to the U.S. market in 2017. The car
would travel 200 miles on one charge.
Overall, GM expects its total operating profits and operating
profit margins to increase this year compared with 2014 after
adjustments for recall costs. The company also anticipates improved
automotive results in all regions. Mr. Stevens declined to provide
details on the auto maker's 2014 results ahead of the release of
its fourth-quarter earnings in February. However, Mr. Stevens said
the results were "much better" than what had been expected at the
start of the year. GM earned an operating profit of $8.6 billion in
2013.
The auto maker's 2016 targets remain on track with a return to
profitability in Europe and operating profits in North America of
10%. Global automotive sales to increase 3% to 89 million vehicles
this year while its market share remains flat.
While growth is slowing, this year begins the acceleration of
what GM sees as an increasing share of growth coming in both
emerging markets and mature markets, but slowing growth in China.
Between 2000 and 2014, China was responsible for 72% of the
industry's growth and 42% came in emerging markets. Mature markets
were a negative 14% during the period. Between 2015 and 2030,
emerging markets will deliver 55% of the growth, China 33% and
mature markets will return to a positive contributor, delivering
12% of the market's growth.
Write to Jeff Bennett at jeff.bennett@wsj.com
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